Politics continue to hamper weak bourse
Blue chip stocks approached two-year lows last week, dragged down by political uncertainty, bad company news and a sour international mood toward Poland, analysts said.
"Everything is unclear and will be more and more unclear the closer the elections are," said Pawel Puchalski, senior analyst with Raiffeisen Capital and Investment Polska, referring to September's parliamentary elections. "The political situation is keeping investors uncertain. That's a very important risk factor."
The Warsaw Stock Exchange (WSE) (http://www.wse.com.pl) rebounded from its deepest depths with bargain hunting, but in a week cut short by the Corpus Christi holiday did not have a strong showing. The market-wide WIG index fell 2.9% to 14,542.84, the blue chip WIG20 fell 3.5% to 1,330.86 and the TechWIG dropped 4.3% to 827.03. Since Jan. 1, the WIG20 is down 26.7% and the TechWIG by 43.6%.
The WSE's heaviest-traded stock and one of the country's largest companies Telekomunikacja Polska (TPSA) and mining concern KGHM Polska Miedz have been especially vulnerable to poor market sentiment during the past year. TPSA last week continued to suffer from rumors started two weeks ago and denied by the government that France Telecom (FT) might not take a further stake in the company. KGHM, in addition to a brewing fight with its union, last week accused a former manager of using company funds to finance personal operations. For the week, TPSA's stock dropped 4.9% to zl. 18.40 per share and KGHM was down 4.3% to zl. 19.10 per share.
A possible no-confidence vote on the treasury minister has also rattled markets because it throws privatization projects into question, Puchalski said.
Also on the negative side, the WSE hasn't been getting the same degree of bounce out of strong performances abroad, Puchalski said. Finland's Nokia, the world's No. 1 mobile phone company on Tuesday forecast very modest market growth for the year, sending shudders through the world's markets and immediately driving the Nasdaq down, though it finished the day about even. Poland's market did not recover as well.
"From time to time there was a signal generated by the New York Stock Exchange and our IT companies rose with it by four or five or 6% and that gave a kick to our indices," Puchalski said. "But it's no longer happening; IT stocks prices are at a very low level and I think investors lost their belief in the future performance of these companies."
The raw sentiment and other factors forced Internet service provider and portal Arena (http://www.arena.pl) to call off its initial public offering (IPO) last week as weak investor interest left the company falling short of its revenue goals.
"The risk was very high, and investors just didn't put money in," said Maria Skowron-Szafranska, an IT analyst with CDM Pekao Securities. "For now we think that Arena will not be listing on the WSE."
The company had hoped to raise zl. 100 million ($25 million).
Another tech IPO this year listed Katowice-based Web-design firm and portal Hoga (http://www.hoga.pl). The 2 million-share subscription ran from May 9-16 and priced the company at zl. 4.50 per share. Hoga's stock has since fallen by more than 25%.
"Last year everybody wanted to have tech companies," Skowron-Szafranska said. "This year investors are more careful. It's not so easy to get money from the public market."
A third IPO, although not tech-related, is set for later this year. The Securities and Stock Exchange Commission (KPWiG) last week cleared for public trade chemicals firm Zaklady Azotowe Pulawy. The plant will offer up to 7.47 million shares, or 46% of its capital, KPWiG said. The government will retain a majority stake in the company.
